China Decides Which Solar Energy Companies Live or Die

“The government picking winners and losers” versus “the free market”: It’s the eternal debate at the center of any discussion about Chinese or American industrial and energy policy. The argument also arises in discussions between American progressives and conservatives, as well as in trade and tariff discussions. How can American solar companies compete on a level playing field with Chinese solar companies that are essentially state-owned entities?

But China doesn’t have to agonize about picking winners and losers. It just does it.

There’s no waiting for a solar shakeout to magically come about, or for companies like Nanosolar or SoloPower to fade away. China simply makes a list of those companies which will continue to receive government help and those firms that will be left to their own resources.

According to the Nikkei Asian Review, China’s “Ministry of Industry and Information Technology has announced a list of 134 producers of silicon materials, solar panels and other components of photovoltaic systems as meeting certain conditions, as measured by 2012 production, capacity utilization and technical standards.”

That’s about 100 companies out of more than 500 in the country producing silicon, wafers, cells, and solar modules that will have the chance to compete. The remainder will find it difficult to participate in government-sanctioned renewable energy project auctions or to receive power or low-cost financing.

Last year, the Chinese government set a 2015 cumulative solar installation goal of 35 gigawatts. China was the second-largest solar market in the world in 2013, behind Japan and ahead of the U.S. and Germany.

Nikkei quoted Jian Xie, COO of solar cell maker JA Solar, who said, “This will help eliminate the industry’s excess capacity. The list will be reviewed every six to twelve months based on business development and technology standards.”

Jade Jones, GTM solar analyst, notes, “The only China-headquartered and publicly traded company that didn’t make the list is LDK. The [reason for the] cut [is likely] because the company is undergoing restructuring.” Jones went on to note that “44 percent manufacture polysilicon/ingots; 16 percent manufacture wafers, 39 percent manufacture cells; and 26 percent are part of module assembly.”

Randy Chang at Cinnamon Solar was kind enough to translate and supply the list of the Chinese solar survivors. Here it is:

Prior to joining Greentech Media, Eric Wesoff founded Sage Marketing Partners in 2000 to provide sales and marketing-consulting services to venture-capital firms and their portfolio companies in the alternative energy and telecommunications sectors. Mr. Wesoff has become a well-known, respected authority and speaker in these fields. He also was the publisher of the Venture Power newsletter, a subscription-only newsletter covering venture-capital investment in renewable energy.